One in five retirees face debt pressure
The average amount outstanding has fallen from £38,200 in 2012, driven mainly by a reduction in the amount owed by males, while the number of this year’s mortgage-laden retirees fell by 7%.
Vince Smith-Hughes, Prudential’s retirement income expert, said the fall in average debt was a welcome sign.
He said: “Debt does not have to be a major issue for people in retirement as long as they have sufficient income and realistic and manageable repayment programmes in place.”
But he added when people’s finances are still under pressure, with expected retirement incomes at a six-year low, it’s important to ensure repayments do not impact retirement incomes too greatly.
The average owed by male retirees plummeted from £45,300 in 2012 to £33,800 this year while for women it fell from £29,400 to £28,100.
Of those surveyed, 20% of all male retirees will enter retirement with debt compared to 16% of females.
The source of debts has shifted with an emphasis on unsecured borrowing.
More than half, 56%, owe money on credit cards, while 21% have outstanding bank loans and 19% have overdrafts, an increase from 13% since last year.
On average retirees with debts expect it will take just under four years to clear the money they owe. One third, 33%, of people expect to pay off their debts in two years while 12% do not expect to ever be debt-free.
Smith-Hughes said: “Paying off debt as early as possible, preferably while still working, will help to ensure that retirees have more disposal income in turn enabling them to enjoy a more comfortable retirement.”